a). Is there a practical alternative to the market economy, present your argumen

Question

a). Is there a practical alternative to the market economy, present your argument?
b) Explain the expected effect on market price and quantity in the market for mobile phone handsets of each of the following circumstances: consumer incomes rise; technical improvements reduce production costs, the price of fixed-line calls falls sharply. Illustrate your answer with the aid of relevant diagrams.
c). Given the definition of income elasticity, why does the income elasticity of demand for food tend to be low in rich countries? Discuss examples of types of goods and services the demand for which you would expect to have a high income elasticity in rich countries. Illustrate your answer with the aid of relevant diagrams.
d). The existence of entry barriers make it unlikely that an industry would be perfectly competitive, what types of entry barriers do you think are important in practice? How can the existence of economies of scale affect the degree of competitiveness in a market?

Explanation / Answer

a) There are no potential alternatives to market economy. This is because any other alternative will result in ineffexient outcome. Even if we see governmnent regulation mimicking the market economy outcome. But this will also have inherited cost and will result in a dominated outcome. Thus there are no potential alternatives to market economy.

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